This paper proposes a new formalism for layout-driven optimization of datapaths. It is based on preserving an arithmetic bit level representation of the arithmetic circuit portions throughout various design stages. The arithmetic bit level description takes into account the arithmetic nature of the datapath and facilitates arithmetic reasoning to identify circuit transformations that are too complex to derive for Boolean reasoning. It is a bit-level representation so that it integrates well into standard design flows. Based on this representation, we developed an optimization algorithm for cycle time. It takes interconnect delay into account and can be applied at late design stages. A prototype has been integrated into a commercial EDA environment. For circuits implementing complex arithmetic expressions we achieved performance improvements of up to 32%.